Donald Trump and European Union officials appeared to step back from a trade war on Wednesday as they struck a deal to work toward “zero” tariffs, barriers and subsidies.

“We had a big day, very big,” the US president said in the White House rose garden, standing alongside Jean-Claude Juncker, the European Commission president, adding that there was a “new phase” in US-EU relations.

The statement came after Trump had threatened tariffs on car imports and reports that the EU is planning retaliatory measures.

Trump said the US and EU will set up an executive working group to work on trade and assess existing tariffs “to the betterment of both”. He added: “We’re starting the negotiation right now but we know very much where it’s going.”

Juncker said it his “intention to make a deal” that would work towards zero tariffs on industrial goods.

Trump added: “This was a very big day for free and fair trade, a very big day indeed.”

Trump and EU officials strike 'zero tariff' deal to avert trade war

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I’ll be back in the morning to see how the European stock markets react. You might expect a rally.... however, the news that Facebook’s shares have tanked in afterhours trading (it missed Wall Street forecasts and lowered its outlook) could weigh on investors.

Europe’s commitment to import a lot more liquified natural gas from America is quite interesting.

During his visit to Europe this month, Donald Trump blasted Germany for signing up to a new natural gas pipeline link with Russia called Nord Stream 2.

Trump claimed the deal made Europe dangerously reliant on Russia for its energy needs - a concern echoed by some experts.

Germany and Russia gas links: Trump is not only one to ask questions

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So does today’s deal fix that problem? Not according to former US ambassador Anthony Gardner, who doubts whether much more LNG will actually cross the Atlantic...

Anthony Gardner (@tonylgardner)

Idea of significantly more LNG shipments to EU absurd. It is not price competitive with piped gas. In TTIP we had already agreed to eliminate 97pc of tariffs including all industrial tariffs — nothing new there though Trump of course will take credit. https://t.co/a2Z49cA239

Here’s a video clip of presidents Juncker and Trump announcing they have agreed to work together on trade:

Donald J. Trump (@realDonaldTrump)

The United States and the European Union have a $1 TRILLION bilateral trade relationship – the largest economic relationship in the world. We want to further strengthen this trade relationship to the benefit of all American and European citizens... pic.twitter.com/4zlmEEtCpG

European trade commissioner Cecilia Malmstrom says Washington and Brussels have “turned a page” in their relationship.

Cecilia Malmström (@MalmstromEU)

Important meeting at the White House today with @JunckerEU and @realDonaldTrump. Turning a page, agreed to facilitate trade between us, looking at zero tariffs on industrial goods, energy and regulatory cooperation. Also intensify work on reform of WTO.

This will be deeply unsettling for China. The first sign that the EU & US might resolve their trade spat and significantly lower bilateral barriers. Early days but that could ultimately mean a tag-team approach towards Beijing. If Trump sticks to this. Big if https://t.co/sJo1cBum0h